WASHINGTON, D.C. -- Banks increased farm and ranch lending in 2009, providing the majority of all farm credit, according to the American Bankers Association Center for Agricultural & Rural Banking's annual Farm Bank Performance Review. A large percentage of bank lending supported small farms.

In 2009, the U.S. banking industry held $126 billion in farm loans, which includes $70.3 billion in small farms loans with $25.1 billion of that in very small farm loans, according to the report. In 2008, the banking industry held $123.5 billion in farm loans. The number of small farm loans in 2009 reached nearly 1.3 million, with the vast majority -- almost 1 million -- under $100,000.

"Banks continue to meet the credit needs of both large and small farms," said John Blanchfield, senior vice president and director of the association's Center for Agricultural & Rural Banking.

"Farm banks" are defined by ABA as FDIC-insured banks with assets of less than $1 billion whose ratio of domestic farm loans to total domestic loans is greater than or equal to 13.52 percent in 2009.

Farm bank deposits increased 7.5 percent from $220 billion in 2008 to $237 billion in 2009 with 98.9 percent of the banks categorized as well capitalized, the highest capital rating given by bank regulators. Despite the challenging economic climate, farm banks increased farm loans by 6.1 percent holding a total of $58.9 billion in loans by the end of 2009. The number of full-time employees at farm banks increased from 72,942 in 2008 to 76,821 in 2009.

"Thanks to the banking industry, rural Americans -- especially the owners of small farms -- are finding opportunities to finance their farms, ranches, businesses, and homes," Blanchfield said. "Banks provide the broadest array of financial products and services to guarantee that rural Americans have access to credit when and where they need it."

The study, which analyzed the performance of 2,295 farm banks in the United States, found:

  • Total loans at farm banks grew 2.3 percent to $182 billion from $171 billion in 2008.
  • Farm banks hold $10.3 billion in loans $100,000 or smaller to small farmers and an additional $12.4 billion in loans between $100,000 and $250,000.
  • The 2,295 farm banks held approximately $285 billion in assets in 2009, up 5.8 percent from 2008.
  • Farm bank income, before taxes, totaled $2.3 billion, which was 21.5 percent lower than in 2008. In 2008, it was $2.9 billion.

A full copy of the report is available here.